Car makers rush to pass on excise relief

German car makers Audi and Mercedes-Benz have lowered prices by up to Rs 3.82 lakh, while Maruti, Tata, General Motors and Mahindra & Mahindra said they would pass on the duty relief to consumers. The excise duty cut will be applicable up till June-end this year.

Car makers have been reeling under a prolonged demand slump because of the slowdown, with annual sales declining almost 10 per cent in 2013.

“We are delighted at the steps taken to boost manufacturing, especially the auto industry. If these initiatives are maintained in the final 2014-15 budget, it should be a much needed positive stimulus for the overall manufacturing sector,” said Pawan Goenka, executive director & president (automotive and farm equipment) of Mahindra & Mahindra.

A Tata Motors spokesperson said, “We will pass on the benefits to the consumers for our new dispatches from tomorrow (as applicable).”

The move will make the new compact sedan Zest and the hatchback Bolt cheaper by by Rs 15,000-30,000, while its SUV Safari will cost less by at least Rs 40,000.

Maruti Suzuki India managing director & CEO K. Ayukawa said the company would pass on the benefits with immediate effect. Maruti recently unveiled the compact car Celerio, carrying a price tag of Rs 4.29-4.59 lakh for the automatic version and Rs 3.9-4.96 lakh for the manual model. Experts expect a price cut of Rs 8,000 to Rs 15,000 on the Celerio.

General Motors India has also decided to slash prices across its entire range. “GM India will pass on the excise duty relief to its consumers and is studying the fine print to determine the exact amount across its car lines,” vice-president P. Balendran said.

Sources said Mahindra and Mahindra might not even need to start production of a new smaller vehicle with lower ground clearance. Analysts said its entire line-up, including the XUV 500, Scorpio, Bolero, Xylo and the Verito series, would see price cuts by at least Rs 40,000.

Mercedes Benz India said the ex-showroom Delhi price of its C-Class will be lower by Rs 55,000 at Rs 39.35 lakh, while the E-Class will now cost Rs 47.66 lakh compared with Rs 46.90 lakh earlier. The ex- showroom price of the GL-Class in Delhi will come down by Rs 2 lakh to Rs 72 lakh.

Japanese car maker Nissan said the excise duty reduction would translate into price cuts ranging from 4-6 per cent.

Superbike maker DSK Hyosung said it was looking to reduce the prices but didn't give the details.

However, analysts said a duty cut alone would not be enough to spur demand. “Revival of a robust demand will be determined by the growth rate of per capita disposable income over inflation, which today is very unfavourable,” Kumar Kandaswami, senior director of Deloitte Touche Tohmatsu, said.